For fairer and lower electric rates

Comment

fosters.com

Writer

Posted Jan. 14, 2013 at 3:15 AM

Posted Jan. 14, 2013 at 3:15 AM

Public Service of New Hampshire officials are right to be concerned that as residential electric users flee the company's higher rates they will be stuck with a smaller base of subscribers to absorb costs. However, we cannot abide by the notion that the Public Utilities Commission should allow more of PSNH's fixed costs to migrate with users who can find lower usage rates elsewhere, unless some significant changes are made in the way the state regulates electric rates.

While the problem of sky-high electric rates is not a one-solution problem, there are some players and their actions are worth a look.

In 2001, the state Legislature partially deregulated and restructured the electric industry. In a nutshell, the delivery and supply (i.e. usage) were separated so they could be billed and sold individually.

This initially encouraged large businesses to shop for better usage rates while still employing the existing delivery system, lines and poles owned by PSNH. While the 2001 legislation allowed individual consumers to also shop around it has been only of late that marketing efforts have begun in great earnest by the likes of ENH Power and North American Power to aggressively court residential users — apparently because of an increasing rate differential. With rates set to increase significantly for customers using PSNH-generated power, the final day of 2012 proved to be a banner sales day for ENH. More than 1,700 New Hampshire homeowners switched to ENH on Dec. 31 alone, owner Kevin Dean reported earlier.

Dean's company now offers a contract rate of 7.28 cents per kilowatt hour through the end of November, versus a non-contract rate of 9.54 cents from PSNH, subject to PUC approval unlike ENH's rates. Dean accomplishes this by bundling the individual needs of his customers and contracting to purchase power in bulk on the New England market. There he can take advantage of lower rates largely derived from natural gas, a modern day gold rush due to the process of fracking in the Marsalis Shale Region which extends from New York through Pennsylvania.

PSNH, on the other hand is hamstrung by a tiered rate structure and legislative dictates that require the purchase of more expensive power from green sources. In effect, PSNH is swimming with weights tied around its ankles while companies like ENH are free to grease up and fly through the electrical waters.

“The one thing that concerns us at this time is that our charge is based on our cost,” PSNH spokesman Martin Murray recently told Foster's, “and as people leave the system, our costs don't change, but the number of people paying those costs does change. It's getting smaller.”

As a result, PSNH may approach lawmakers and the PUC to request permission to shift some of the costs connected with technological upgrades at its power plants onto all power consumers, including residential users who migrate to alternative suppliers. Currently, PSNH customers alone pay those costs. One such investment is the $400 million project to install a new mercury and sulfur emission reduction system at the Bow power plant.

But the cost of Bow is just one example of the regulatory mess in which PSNH finds itself. Since at least 2010, PSNH has been embroiled in lawsuits over the need for environmental upgrades at the plant and now what portion of those costs can or should be passed along to electric users.

In looking to address all of the above, we urge the Legislature to consider simplifying the process of assigning costs. Consider getting PSNH out of both ends of the business to end the debate over fixed versus variable costs. Revisit legislative demands that skew the free market pricing structure of electricity. And to the extent possibly foster competition among all comers to offer even lower rates.

In the end, we believe such an approach will provide greater rate stability and foster even more competition among providers.